MINUTES OF THE ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session March 3, 1995 The Committee on Government Affairs was called to order at 8:00 a.m., on Friday, March 3,1995, Chairman Bache presiding in Room 330 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Douglas A. Bache, Chairman Mrs. Joan A. Lambert, Chairman Mr. P.M. Roy Neighbors, Vice Chairman Mr. Max Bennett Mrs. Marcia de Braga Mr. Pete Ernaut Mrs. Vivian L. Freeman Mr. William Z. (Bill) Harrington Ms. Saundra (Sandi) Krenzer Mr. Dennis Nolan Mrs. Gene Wines Segerblom Ms. Patricia A. Tripple COMMITTEE MEMBERS ABSENT: Mrs. Deanna Bruanlin, Vice Chairman (excused) Mr. Wendell P. Williams (excused) GUEST LEGISLATORS PRESENT: None STAFF MEMBERS PRESENT: Denice Miller, Research Analyst OTHERS PRESENT: Mr. Marvin Leavitt, City of Las Vegas Ms. Candice S. Rohr, Kingsbury General Improvement District Ms. Nancy McLane, Clark County Sanitation District Mr. Fred Turnier, Clark County General Improvement District Mr. Donald G. Strachan, Lyon County resident Mr. Clifford Thompson, Lyon County resident Mr. Andy Anderson, Las Vegas Police Protective Association Mr. William H. Cavagnaro, Las Vegas Metropolitan Police Department Mr. Roger Eggenburg, Incline General Improvement District Mr. Jack Jeffrey, SNBTC Mr. M.K. (Ike) Yochum, Independent American Party Ms. Julie A. Wilcox, Las Vegas Water District ASSEMBLY BILL 164 - Revises provisions governing jurisdiction and authority of certain units of specialized law enforcement established by political subdivision. (BDR 22-687) Chairman Bache opened the meeting on A.B. 164 and recognized Mr. Leavitt. Mr. Marvin Leavitt representing the city of Las Vegas stated A.B. 164 was introduced at the request of the city and in effect those jurisdictions that participate in metropolitan police department arrangements. He said it deals with marshals and park rangers which allows them to do two things they are not currently doing, and has language which clarifies one additional thing. It provides rights of specific authority for something they are already doing. He said one, under the current law, a park ranger and marshal have the authority to enforce the law within the boundaries essentially in the city parks and this is extended to include areas outside the city parks but on city property. He said it would basically extend to facilities owned by the city. He said it specifically allows them to serve warrants of arrest issued by the municipal court, which they have been doing for many years. It also states the removal of abandoned vehicles. He said this has been a problem, and the metropolitan police are too busy with other priorities to take care of this on a day to day basis. He said this bill would essentially relieve the metropolitan police department from having to do work in the areas that relate specifically to city property. Mr. Leavitt gave an example of this bill being an amendment last session and within the last week of session it went to the Senate and the committee approved and asked for the amendment. On the last night of the session, the amendment arrived, was submitted for review, and was approved. It went back to the Senate where they passed an amendment which he thought was the amendment he approved, but in reality the Senate had passed a conflict amendment necessitated because of the other amendment. He said the amendment he wanted never passed. He said basically, that is why this bill is back this session. Chairman Bache recognized Mr. Andy Anderson. Mr. Andy Anderson, President of the Las Vegas Police Protective Association, spoke to say the people who are affected by the bill, are members of his association and say they have no objection to the bill, and stand in support of it. Mr. Bill Cavagnaro of the Metropolitan Police Department spoke in support of A.B. 164, stating they need to have the power in city hall and on city property. Donald G. Strachan, a geologist from Yerington Nevada, stated he is not against A.B. 164 but felt it needed minor modifications and clarifications so it would not be construed as an amendment that would pertain to areas outside municipalities or city parks. He said the terms "marshals" and "park rangers" in combination with the bill A.B. 43 (Exhibit C), could be construed in years to come as allowing federal officers, park officers or marshals to enforce Nevada laws. They would be paid by the federal government. He said it sounds far out, but at the same time if changes were placed where political subdivisions are stated on line 2 of the first page, it could be changed to say .. political subdivision of Nevada.. And on line 16 change to say.. a unit consisting of Nevada city or municipal marshals or park rangers..., and not leave it open to other political subdivisions outside of Nevada. He stated his fear is this bill A.B. 164 in combination with A.B. 43, could in the future be used to substantiate or support intervention or the addition of federal officers in Nevada. He asked the committee to look at A.B. 43 lines 9 and 11. He then read those lines. He said it was not the intent of Las Vegas to allow the federal government, if they had a specialized law enforcement unit, enter into a cooperative agreement with another Nevada law enforcement entity. He feels the way the wording is now, it could happen. To further support his theory, he read an article from the Reno Gazette dated March 2, 1995, where Janet Reno from the Justice Department was asked to investigate potential civil or criminal offenses by citizens in Nevada against the Bureau of Land Management or forest service employees. He said there is a fear among the federal employees that they are being unduly subjected by the citizens of Nevada by harassment. He suspected it was a Nevada problem, not a federal problem. Chairman Bache stated the definition in the statute of political subdivision, refers to county, city, or other. It has to be subdivision of the state, it cannot be the federal government. Mr. Strachan asked that lines twenty through twenty-two of section three be looked at. He said the amendment stated does not need to be there if you are talking about city or county employees. Chairman Bache recognized Mrs. Lambert. Mrs. Lambert stated the language Mr. Strachan was concerned with is in Chapter 280 and the federal government will not fall under this. Mr. Strachan stated he did not trust the federal government. He went on to speak about specialized law enforcement. He quoted a letter from Representative Hansen of Utah, asking Janet Reno whether or not it is true she has asked for additional series of agents for operations within the states to take care of problems arising from the public lands movement. He admitted this was tenuous, but felt the language on page two, lines twenty through twenty two are redundant. He said when construed with A.B. 43, which says any state or federal statute, is repeating itself. Chairman Bache stated he would have the legal research look at the wording. Chairman Bache recognized M.K. Yochum of the Independent American Party. Mr. Yochum stated his concerns were concurrent with Mr. Strachan's testimony and added tyranny does not come down in one full swoop, it usually comes down in small increments by well meaning and well intentioned revisions. This seems to be a good case in point. With no further testimony, Chairman Bache closed the meeting on A.B. 164. ASSEMBLY BILL NO. 138 Repeals requirement for formal notice of lien for unpaid charges of general improvement districts. (BDR 25-183) Chairman Bache recognized Nancy McLain. Nancy McLain of Clark County Sanitation District spoke about what is being requested by the Sanitation District in A.B. 138. She said initially there is a change to NRS 318.140, which will be discussed by Fred Turnier. She spoke about NRS 318.197 subsections two and nine. She said the sanitation district operates under NRS 318. Under this statute the sewer service billings and related charges constitute a perpetual lien on every property that is served by the sanitation district. This is done only when the property owner is provided a notification of the lien. These liens are prior and superior to all liens except those of general taxes and special assessments which distinguishes them from mechanic's liens. She said the notices of liens are prepared and recorded for non payment of charges. She said they bill their customers quarterly, and if the bill becomes delinquent, notices are sent to the property owners. They are billed several times, and then finally during the eleventh month of their fiscal year a lien is placed on the property. She said subsection two is being requested to be changed because it requires compliance with subsection nine. Her concern is there is a window of time in which the district is unable to collect the money due because of the time required to send the delinquent payment notices and record the liens. She said with the transient population and property change in Clark County, they are often unable to collect these delinquent charges during the transfer of property in escrow. In addition she said when property owners file bankruptcy, if there is not a notice of lien recorded on the property, they become a priority eight creditor, unsecured, rather than a priority two secured creditor. She said over the years the delinquent accounts have increased, as the customer base increases, and account for approximately forty thousand dollars per year in uncollectible revenue. She said subsection nine was originally requested to be deleted, and she requested it be amended and said she would submit it. She hoped by amending their original request, they will address concerns of the title companies, who do not want some of the smaller districts created in NRS 318 exempted from subsection nine, the notice requirement. She said they are now requesting that only sanitary sewer districts be exempt from actually recording those lien documents. She said subsection nine necessitates a labor intensive manual process, requiring a production of a paper document, which has to be signed, notarized and recorded by the county recorder. The sanitation district has a customer base of nearly eighty thousand customers, with approximately four to five thousand accounts being under lien each year. She said because of the volume, this manual process is not efficient or cost effective. She said they expend approximately four hundred and seventy five man hours annually on the lien process and related lien releases in addition to the recording fees and postage. The total cost of this lien process is currently in excess of seventy three thousand dollars and is increasing each year. All of these costs are passed on to the consumer. She said NRS 318.197 subsection two could be amended regarding compliance with subsection nine. If subsection nine were amended to exempt sanitary sewer districts from compliance, sewer service billings and related charges would be equivalent to a tax lien, and would constitute a lien on the property with or without the recordation of that lien document. She said this would only apply to sanitary sewer districts. The sanitation district would be assured all delinquencies would be collected in a timely manner, either from the current property owner or at the time of transfer of ownership and in addition would insure a priority status as a secured creditor in bankruptcy proceedings. She said if accounts remain delinquent for one year, they would be placed on the Clark County tax roll for collection. The costs related to the lien processing would be eliminated and would result in a savings to the customers. She said by limiting the waiver of notice to sanitary sewer districts, other districts created under this statute would still comply with subsection nine, insuring that persons effecting transfer of ownership could identify the claims of other districts when conducting their title searches and providing title insurance. She then asked for support of the bill draft as proposed Nevada Revised Statute amendments would clarify there is a lien upon a property from the time of billing, enabling the district to keep the rates and charges to a minimum without a concern for lost revenue due to delinquent accounts. She then asked for questions. Chairman Bache recognized Mr. Bennett. Mr. Bennett asked what is the average length of time the sanitation district remains unprotected. Ms. McLain responded it is approximately eleven months from the initial time of billing until the lien is recorded. Chairman Bache recognized Mrs. Lambert. Mrs. Lambert asked if the lien will be recorded, and notice not sent to the property owners. Ms. McLain said they do not want to have to record the lien. They want the bill by its existence to constitute a perpetual lien without having to perfect the lien by recording the document. Mrs. Lambert asked how is someone who buys property going to know if there is a lien against the property. Ms. McLain said it would be the same as a tax lien, where it would automatically be an item that would be checked. They would also provide a computer link up to the title companies. Mrs. Lambert stated that Ms. McLain's district could, because of its size, but there are sewer districts that are so small they never buy anything. Ms. McLain stated she believed it could be set up so the title companies would automatically check those items upon conducting title searches just as they do property taxes. Mrs. Lambert went on to ask if they were basically making it easier for your district and harder for all the title companies and people who buy up property. Ms. McLain replied they normally check with them anyway. She said they were insuring should there be any problem, they could collect the amount due. She said they have good relationship with the title companies in Clark County. Mrs. Lambert replied unfortunately you are dealing with either all general improvement districts in Clark County or all sanitary sewer general improvement districts throughout the state. She expressed her concern, because there are quite a few small sewer districts under Chapter 318 throughout the state. Chairman Bache recognized Mr. Fred Turnier. Mr. Fred Turnier of the Clark County Sanitation District spoke asking for an amendment to NRS 318.14011. 2, lines 19-21 on A.B. 138. He said it basically states, a private developer when extending a sewer line for their development, even when the district participates in the cost for that sewer line extension, they would be exempt from the provisions of NRS 332, 338 and 339, which is the public works act requirements. He said over the past twenty years, the sanitation department has worked in partnership with the developers in putting in sewer main line extensions, it being very cost effective. He said recently the district attorney offices issued an opinion which said if a district participates financially on any of these projects, then the provisions of NRS 332, 338 and 339 will apply. These again are development projects and the concern is it increases the cost to everyone. He then went to the black board and gave an example. He said when a developer puts in a sewer line, they usually size the pipe to meet their development needs. The district will then ask they put in a larger pipe and offer to pay the difference. This allows the community to get in their part of the project at a lower cost. The sewer district does not actively participate in the cost until the end of the project. He stated these type of projects help keep the costs down. Chairman Bache recognized Mrs. Krenzer. Mrs. Krenzer asked if it was true they would not have to go back later if the pipe was extended beyond and if not, you would have to go tear up the road? Mr. Turnier replied "Yes", if they did not do it this way, they would end up with more than one pipe in the ground, and would continually be tearing up the streets. Chairman Bache recognized Mr. Neighbors. Mr. Neighbors stated, assuming you have this line for future use, you pick it up on the hook up fee. Mr. Turnier replied in the positive. Mr. Neighbors then asked if they were allowed to put a water line in the same trench as a sewer line. Mr. Turnier stated they try not to do that, but it is done occasionally. He said normally the water lines are not as deep as sewer lines. Chairman Bache recognized Irene Porter. Irene Porter, Executive Director of Nevada Home Builders Association, spoke saying the trench, the labor and the pipe are paid for by the builder and no public funds are involved at time of construction. The contractor pays all the costs for the building of the project. At the end there is either a refunding agreement with the utility or an oversizing agreement. The difference is on a mainline extension, a refund agreement is done wherein the builder would get back the difference in cost of the pipe for the future capacity. This would come out of connection fees paid by the property owners, or, after the entire project is completed and handed over to the sanitation district, the sanitation district out of their connection fee funds, which come off of other properties that are being developed, pay the builder the difference in the price between the two. She said they are not using public money up-front, it is all builder money going in. Chairman Bache recognized Mr. Ernaut. Mr. Ernaut asked if the Home Builders Association had any other interest in the bill other than section one. Irene Porter replied they were only interested in the oversizing and the district attorney's opinion. Mr. Ernaut expressed his opinion regarding how twenty five years later a common sense item becomes illegal. Irene Porter responded, it was her understanding that lines 19-21 will have to be rewritten. She felt it was unclear and they want to get it straightened out with the bill drafters as to exactly what they are doing. Julie Wilcox, Las Vegas Valley Water District asked also for an amendment, basically the same as the sewer issue, but only with water projects. She said the amendment would be an amendment to section 318.144 of this bill. She said the reason the Las Vegas Valley Water District can solve their problem, along with the sanitation district, is that they were created under a special act, and that act allows them to work with NRS 318. She also represents the Southern Nevada Water Authority. She said there is a companion bill coming from the Senate that will deal with the same issue, only it will create a solution for the cities. She said they will work with the bill drafters to get the language more precise. Jack Jeffrey, Southern Nevada Building & Construction Trades Council, stated his concern with the language of the bill on line 21... even if the district pays part of the cost... It is his belief if the district pays over one hundred thousand dollars, it should be covered under the prevailing wages, the existing law it provides. It has never been a problem and he is unaware of any complaints having been filed. His concern is the precedent which may be established in that other people will be coming in asking for similar exceptions. He said if the developer pays all the construction costs, then the citations in 338.010 to point 90 would not apply. He said he has no stake in the rest of the bill. He said the way they are presently operating now, is basically the way the amendment will be read. Chairman Bache recognized Mr. Nolan. Mr. Nolan asked Ms. Porter `s opinion on the rest of the bill. He asked if it were her experience if a lien is levied in the way it is suggested, will it automatically come up in an escrow or title search. Irene Porter replied she is not familiar with that. Pat Coward representing the Land Title Association, spoke from Clark County's point of view. Having electronic hookups between the sanitation districts and title companies having a good working relationship would need to be in place. As far as the rest of the state is concerned, he said if the notification does not go forward, and there is no electronic capability, it could cause problems. Mr. Turnier spoke they could go back and amend it so it would be specifically for the Clark County Sanitation District. Chairman Bache stated there might be a constitutional problem with doing that. He said research would have to check it out. Chairman Bache recognized Candi Rohr. Candi Rohr of the Kingsbury General Improvement District spoke in support of the lien provision changes. She said it will not affect her district either way. She said they have twenty- two hundred customers, and they will continue to record liens against properties when they feel it is necessary to protect their interest. She asked for their consideration on an amendment which causes them to be in noncompliance with the law. See (Exhibit D). She then asked for questions. Chairman Bache recognized Mrs. Lambert. Mrs. Lambert asked why they chose to be in violation of law now? Ms. Rohr answered they started assessing penalties in 1987 and did not realize at that time they were in violation of the law. They chose not to change the billing cycle knowing eventually it would be brought to committee, and they could ask for a clean up of the language of the law. Mrs. Lambert replied, rather than comply with the law, you just felt you would violate it and ask us to make it legal. Ms. Rohr replied in the affirmative. Chairman Bache recognized Roger Eggenburg. Mr. Roger Eggenburg, Director of Utilities for Incline General Improvement District spoke. He submitted a letter to the committee dated February 28, 1995. See (Exhibit E). He said the requirement for liens places a burden on them for collection of past due utility accounts. They support the bill. Chairman Bache recognized Mr. Kurt Fritsch. Mr. Kurt Fritsch, representing the city of Henderson as well as representing Mr. Warren Hardy of North Las Vegas stated the cities are not directly impacted by A.B. 138, however they have been impacted by the district attorney's opinion. There will be a companion bill introduced on the Senate side. He said it is these types of agreements, working with the private developers, that have allowed southern Nevada to essentially keep up with the tremendous growth in the valley. They would like to support the concept of A.B. 138, and ask for the indulgence and support when the companion bill comes to the committee. Chairman Bache recognized Mr. Nolan. Mr. Nolan asked a question of Ms. McLain. He asked how many liens were filed last year and approximately the percentage of responses favorable. Ms. McLain answered, in June of 1994 they recorded just under five thousand liens. She went on to say, those charges are then rolled over into the next annual billing cycle, and become part of the next bill. By the time an annual cycle ends, normally all but fifteen hundred are paid. The remaining fifteen hundred are attached to the property taxes and collected by the Clark County Treasurer. Mr. Nolan asked if approximately thirty five hundred property owners respond to the liens and pay their debt. Ms. McLain agreed. Chairman Bache asked if the bill was done annually. Ms. McLain replied they bill annually, with quarterly option for those who choose to do so. Delinquent notices are sent out before the lien process begins. Chairman Bache asked if billing practices were changed, would it eliminate the problem. Ms. McLain responded "no." She said the city of Las Vegas has a similar problem. They bill one twelfth of their customers monthly, and they have found they record approximately twelve thousand liens per year. She said they have found if they continue to bill, they ultimately collect the money prior to recording the lien. Chairman Bache recognized Mr. Harrington. Mr. Harrington asked how much money per lien? Ms. McLain stated it depends on the account. In the case of a large commercial customer, it could be many thousands of dollars. In the case of a residential account it could be fifty to seventy five dollars. She stated her lien balance in June was 1.6 million dollars. Mr. Nolan asked if they have approximately five thousand liens and you public notice all of them, and seventy five percent pay their debt after the lien is recorded, what will not notifying these people anymore by mail of the liens accomplish. Ms. McLain stated the lien itself has not been that much of a catalyst for payment, it is the fact it rolls into the next billing cycle, appearing on the next bill. The actual lien is there for protection if the property is sold, unpaid, or goes into bankruptcy. Mr. Nolan spoke saying it is not a response in a timely manner to a lien itself, but when the bill comes due. Ms. McLain replied in the affirmative. Chairman Bache recognized Mr. Bennett. Mr. Bennett asked for a dollar figure in losses passed on to the consumer. Ms. McLain replied the annual revenue loss is approximately forty thousand in uncollectible charges, the lien process and related labor is in excess of seventy three thousand. This amount goes up every year as the customer base increases. Mr. Bennett asked if then it was one hundred thirteen thousand a year. Ms. McLain replied in the affirmative. Chairman Bache recognized Mr. Harrington. Mr. Harrington gave his opinion on the bill; it should be limited to those sewer districts that have electronic capability to get it to agencies before properties were sold. He asked Ms. McLain if she would be opposed, and in addition, if the notice of lien was not given to the Realtors or trust companies in a timely fashion, it would not be passed on to the succeeding property owners. Ms. McLain replied they could probably live and comply with that. Seeing no further testimony, the meeting on A.B. 138 was closed. Chairman Bache introduced Bill Draft 58-804. BILL DRAFT 58-804 Removes prohibitions against individual water meters in mobile home parks. ASSEMBLYMAN dE BRAGA MOVED TO INTRODUCE BDR 58-804. ASSEMBLYMAN NOLAN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY ALL MEMBERS. Chairman Bache called for a five minute recess. Chairman Bache called the meeting to order. ASSEMBLYMAN LAMBERT MOVED TO AMEND AND DO PASS A.B.138. DELETE SECTION 2 AND AMEND SECTION ONE TO CLARIFY THE LANGUAGE ON LINES 19 THRU 21 THAT IF THE DEVELOPER PAYS, THEY WILL NOT HAVE TO COMPLY WITH CHAPTER 338.010 TO 338.090 THE PREVAILING WAGE. ASSEMBLYMAN NEIGHBORS SECONDED THE MOTION. Mrs. de Braga asked if you delete section 2, you will leave it the way it is. Mrs. Lambert replied in the affirmative and expressed her concern if they take the provision on page three out, then anyone who buys property in the state of Nevada could have a surprise sewer lien that they do not know about. She said it would create havoc on anyone who buys property. Mr. Ernaut stated it is unfortunate these two items were put in the same bill draft. He stated section one is the immediate concern, and is just common sense. He said this is a perfect example of common sense and supports Mrs. Lambert's motion. Mr. Nolan spoke he agreed with the amendment and what was being done in that section. Conceptually he disagreed with what was trying to be accomplished with the bill. He understands a one hundred forty thousand dollar debt is being incurred annually as a result of people's property being liened and not being notified. He stated it sounds as though this district has an inherent right to lien property anyway without going through the system, but has a problem with the public notice aspect being removed. He feels this could be answered in the billing procedures as soon as the lien is incurred, by getting notice out and notice that additional payments will be due. Mr. Harrington stated he agreed, and would be voting amend and do pass. He said just one lawsuit from not giving lien notice would chew up that one hundred twenty three thousand dollars rapidly, and they would make a grave mistake by trying to recoup those expenses at the risk of multiple lawsuits. Mr. Bennett stated that one hundred thirteen thousand dollars in Clark County is a dime a head. It is not worth getting rid of public notice. Chairman Bache asked for a vote. THE MOTION CARRIED UNANIMOUSLY BY ALL MEMBERS PRESENT. Having no further business before the committee, the meeting adjourned at 9:15 a.m. RESPECTFULLY SUBMITTED: Kelly Liston, Committee Secretary APPROVED BY: Assemblyman Douglas A. Bache, Chairman Assemblyman Joan A. Lambert, Chairman Assembly Committee on Government Affairs March 3, 1995 Page